The importance of making sure that your insurance policies cover SEC investigations was hammered home this week when a federal district court in New York ruled that American International Group Inc. and Tokio Marine are not obligated to indemnify Hertz Global Holdings Inc. for $27 million in costs incurred in connection with an SEC investigation.
AIG unit National Union Fire Insurance Co. had issued Bonito Springs, Florida-based Hertz a $15 million insurance policy that permitted it to recover for securities claims against the company and for claims made against insured persons, according to the ruling by the U.S. District Court in New York in Hertz Global Holdings Inc. v. National Union Fire Insurance Co. of Pittsburgh, et al.
Tokio Marine provided an additional $15 million of insurance coverage for claims made and paid under the National Union policy.
A class action complaint was filed, and an SEC investigation was conducted. The court found that the class action was covered, the SEC investigation was not, based on the explicit language of the insurance policy.
Hertz Global Holdings, Inc. vs National Union Fire Insurance Company of Pittsburgh
